X Company currently buys a part from a supplier for $13.18 per unit but is considering making the part itself next year. This year, they purchased 3,200 units of this part; next year, they think they will need 3,600 units. Estimated costs to make the part are:

Per-Unit Total

Direct materials $2.71 $8,672

Direct labor 4.17 13,344

Variable overhead 4.00 12,800

Fixed overhead 4.60 14,720

Total $15.48 $49,536

Of the estimated fixed overhead, $6,771 are common costs that would be allocated to the part; the rest would be additional fixed overhead costs. X Company currently rents unused factory space for $2,900; it will have to use this space to make the part. If X Company continues to buy the part instead of making it, it will save ___________

Question

X Company currently buys a part from a supplier for $13.18 per unit but is considering making the part itself next year. This year, they purchased 3,200 units of this part; next year, they think they will need 3,600 units. Estimated costs to make the part are:

	Per-Unit	Total
Direct materials	$2.71	$8,672
Direct labor	4.17	13,344
Variable overhead	4.00	12,800
Fixed overhead	4.60	14,720
Total	$15.48	$49,536

Of the estimated fixed overhead, $6,771 are common costs that would be allocated to the part; the rest would be additional fixed overhead costs. X Company currently rents unused factory space for $2,900; it will have to use this space to make the part. If X Company continues to buy the part instead of making it, it will save ___________

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Question

X Company currently buys a part from a supplier for $13.18 per unit but is considering making the part itself next year. This year, they

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